Providers Projecting Decrease in Capital Expenditure Budgets as Patient Admissions and Focus On IT Increase, According to

September 2011 edition of the Premier healthcare alliance’s Economic Outlook also features insights from industry experts on comparative effectiveness, medical device transparency

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Uncertainty about macroeconomic conditions and the potential impact of health reform could be leading to more conservative health system capital budget expenditures, according to a survey published in the Premier healthcare alliance's September 2011 Economic Outlook.

Economic Outlook survey results

Sixty-nine percent of the 743 survey respondents indicated that capital budgets for 2011 remained flat or increased as compared to 2010. This is down from 72 percent in March 2011 and equal to the figure reported in September 2010.

Overall, 41 percent of respondents suggested an increase in spending, versus 46 percent in March 2011 and 42 percent in September 2010. Thirty-one percent of respondents suggested a decrease in capital budget expenditures, versus 28 percent in March 2011 and 32 percent in September 2010.

According to Premier Chief Operating Officer Mike Alkire, “Similar to consumers, providers are under increasing financial pressure due to high costs and declining reimbursement. This financial stress is likely to increase as further cuts could be implemented by future deals to finance our nation’s debt.”

Survey results also suggest that financial and supply chain executives are increasing their focus on healthcare information technology (HIT). When asked in which areas they expect to make the largest capital investments and expansions over the next 12 months, 40 percent suggested HIT and telecommunications, up from 34.5 percent in March 2011.

“This is another example of the impact reform has on healthcare executives who traditionally focus on price points to now consider the impact of technology on the supply chain,” Alkire said.

When asked to quantify their forecasts for 2012 patient admissions, 60 percent of survey respondents indicated that they expect patient admissions to increase next year. Approximately 50 percent of both the acute and non-acute care sectors expect admissions to increase by up to 5 percent. Strong growth in the non-acute care sector is evidenced by the 18 percent of respondents who expect that patient volumes in this sector will increase by more than 5 percent.

September 2011 Economic Outlook

The semiannual Economic Outlook helps Premier’s 2,500-plus hospital and health system members better estimate supply cost inflation during their budget processes, projecting rates of inflation for the ensuing 12 months.

According to the September 2011 edition, annual market inflation rates will increase on average between 2.4 percent and 6.0 percent across categories such as cardiovascular services, facilities, imaging and nursing. Premier's existing contracts, excluding foodservice and pharmacy, are expected to increase by about 0.81 percent on average in the next year, lower than overall market increases, which are predicted to be an average of 3.2 percent during this time frame.

The September 2011 Economic Outlook also includes insights from the following healthcare leaders:

  • How Health Financing Policy Shapes Physician Practice In The U.S.: Lessons from abroad; Karen Davis, Ph.D., president, The Commonwealth Fund.
  • Creating a New Transparent Medical Device Marketplace; Wayne Oliver, vice president, Center for Health Transformation.
  • Comparative Effectiveness: What it means, and what it means for hospitals; Lawton R. Burns, Ph.D., MBA, director, Wharton Center for Health Management and Economics, University of Pennsylvania.
  • A conversation with Tim Quinlan, economist for Wells Fargo.

The following experts provided insight on topics, including value analysis and physician preference items:

  • Vanderbilt University Medical Center:
    • George E. DeLong Jr., chief supply chain officer and associate hospital director.
    • Dr. William T. Obremskey, MD, MPH, associate professor of Orthopaedic Surgery and Rehabilitation.
  • The University of Texas M.D. Anderson Cancer Center:
    • Dr. Jeffrey Weinberg, associate professor;
    • Lisa McMillian, manager of materials utilization; and
    • Corliss Denman, director of perioperative operations.
  • Cindy Christofanelli, RN, MSN, CMRP, corporate director of Supply Chain Management at SSM Health Care.
  • Timothy K. Glennon, vice president of Clinical Resource Management, GNYHA Services Inc.
  • Alex Rodriguez, MD, MBA, FACC, senior advisor at Nexera Inc.
  • Dr. Kevin J. Bozic, an orthopedic surgeon and professor at the University of California, San Francisco.
  • Brian DeBusk, Ph.D, MBA, CEO, DeRoyal.
  • Brian Kane, director of market development, NuBone LLC.

About the Economic Outlook

Premier’s Economic Outlook highlights emerging economic and industry trends impacting Premier healthcare alliance members and the overall industry. The publication leverages subject matter expertise to build consensus from diverse points of view while highlighting best practices and strategies needed to drive performance improvement.

Premier releases a new analysis every six months to ensure content and projections reflect changing market conditions. The focus of the September 2011 Economic Outlook is on cost, quality and purchasing trends specific to the physician preference market; strategies for managing the cost of physician preference items (PPI); and how shifts in the healthcare landscape, such as physician alignment, bundled payment initiatives and risk or gain sharing models are changing the utilization and purchasing practices of PPI.

About the Premier healthcare alliance, Malcolm Baldrige National Quality Award recipient

Premier is a performance improvement alliance of more than 2,500 U.S. hospitals and 78,000-plus other healthcare sites using the power of collaboration to lead the transformation to high quality, cost-effective care. Owned by hospitals, health systems and other providers, Premier maintains the nation's most comprehensive repository of clinical, financial and outcomes information and operates a leading healthcare purchasing network. A world leader in helping deliver measurable improvements in care, Premier has worked with the Centers for Medicare & Medicaid Services and the United Kingdom's National Health Service North West to improve hospital performance. Headquartered in Charlotte, N.C., Premier also has an office in Washington. Stay connected with Premier on Facebook, Twitter and YouTube.


Premier healthcare alliance
Alven Weil, 704-816-5797

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